NEW YORK, Jan. 26, 2026 /PRNewswire/ — Egan-Jones released an analysis examining the implications of a recent executive order directing increased federal oversight of the proxy advisory industry and its potential impact on proxy advisors and investment managers.
The article explains that on December 11, President Trump signed an executive order instructing multiple federal agencies, including the Securities and Exchange Commission, Department of Labor, Federal Trade Commission, and Department of Justice, to increase scrutiny of proxy advisors. The order focuses on conflicts of interest, transparency, market concentration, and accountability, with particular attention on the two largest proxy advisory firms.
According to the publication, the executive order signals a significant shift for the proxy advisory industry and proxy voting practices. It notes that investment managers relying on major proxy advisory firms under review may face heightened regulatory and reputational risk as a result of the order.
The analysis outlines several concerns raised by the executive order, including inadequate disclosure of conflicts of interest, lack of transparency in voting methodologies, potential fiduciary liability for recommendations not based on pecuniary factors, and anti competitive practices that have contributed to market concentration. The article details actions directed at the SEC, FTC, and Secretary of Labor to review existing rules, investigate anticompetitive and deceptive practices, and reassess fiduciary standards related to proxy advice for ERISA covered plans.
The commentary also emphasizes that investment managers retain responsibility for proxy voting decisions even when using third party proxy advisors. It notes that federal agencies are directed to assess whether reliance on opaque methodologies or non pecuniary considerations may violate fiduciary duties and whether additional transparency is required.
The article concludes that while agency responses are still unfolding, the executive order reinforces long standing concerns discussed in recent congressional hearings and state investigations. It suggests that investment managers may seek to reduce risk by working with proxy advisors that are free from conflicts, independent of benchmark driven bias, and focused on protecting and enhancing investor wealth.
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SOURCE Egan-Jones Ratings Co.
